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In brief: The FBI says that fraudsters swindled over $5.6 billion from Americans last year via cryptocurrency-related schemes, a significant 45% increase from the already high losses in 2022. Investment fraud was by far the biggest culprit, accounting for $3.96 billion, or almost 71% of all losses.
The FBI says it received almost 70,000 complaints from victims of financial fraud involving Bitcoin, Ether, and other digital currencies.
Casting a wider net, the FBI says that while crypto-related complaints represented only about 10% of the total number of financial fraud complaints, the losses associated with them accounted for almost 50% of the total losses.
Investment scams usually involve fraudsters luring people in with promises of massive returns and low risk. They build a rapport with the victims over weeks or months, often making first contact on dating apps or social media. Once they've gained their trust, they convince them to "invest" using fake crypto websites and apps.
To really sell the scam, they'll even let victims withdraw small amounts initially to make it seem legit. But eventually, the person's entire investment is stolen. Adding insult to injury, the scammers then try to shake down their prey again with bogus "recovery" services claiming they can get the money back.
According to the FBI's Michael Nordwall, "The decentralized nature of cryptocurrency, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrency an attractive vehicle for criminals, while creating challenges to recover stolen funds."
While victims span all ages, seniors seem to be getting hit especially hard. The over-60 crowd reported losses totaling $1.24 billion. It's unclear if fraudsters are deliberately targeting older Americans more frequently, or if they're just more diligent about reporting these crimes.
Regardless of age, the FBI says you need to be extremely wary of any unsolicited crypto investment opportunities from random people online. If it seems too good to be true, it absolutely is. Don't put your faith, or funds, into the hands of someone you've never met in real life.
At the end of the day, cryptocurrency is the digital equivalent of cash. Once those coins are gone, it is nearly impossible to recover them. The FBI says that recovery is challenging since once payment goes through, the recipient quickly transfers it to an overseas account for cash-out purposes.
Inline image credit: Virrage Images